Q3 DEALS: Cross-border investors renew faith in Brussels

Brussels is almost a dirty word for growing legions of eurosceptics, but the 'capital' of the European Union and Belgium as a whole is attracting an increasing share of equity from international real estate investors hailing from as far afield as the Nordics, the US and Asia.

TOP 10 BELGIAN DEALS
First nine months of 2015
_____________________________

1. Chinese SWF, AEW scoop €1.3b European Celsius mall portfolio
2. Ilmarinen takes 50% stake in €300m+ Brussels tower
3. Apollo Global Management buys CBRE GI portfolio in Belgium for €145m
4. Befimmo buys Brussels airport project for €140m
5. WDP invests €115m in Benelux logistics assets
6. Schroders acquires Bastion Tower in Brussels
7. CBRE GI acquires two Belgian retail assets for 5.4% yield
8. Société de l’Argayon acquires retail warehouse portfolio for €75m
9. Primonial REIM buys in Brussels and Paris
10. GAC acquires Marnix 13-17 for €60m

Source: JLL and PropertyEU Research

______________________________

Heavyweight international investors piling into the market accounted for 54% of real estate spend in Belgium over the first nine months, leading to a deal surge of 59% to €3.3 bn by the end of the third quarter. A full-year volume of more than €4 bn is on the cards.

And for the first time ever retail property took a bigger share of the pie than offices. In its Q3 report, JLL measured a 50% share for retail property, or €1.7 bn so far this year compared to a 10-year average of just 20%.

The strong increase came in the July-September period when some €1.2 bn was invested in retail real estate in Belgium, 10 times the figure for the same quarter in 2014. The largest investment in both retail and the Belgian real estate market as a whole was the acquisition by China Investment Corporation and AEW Europe of Waasland shopping centre and 50% of the Wijnegem mall. The two assets, along with eight in France, formed CBRE Global Investor's Celsius portfolio which CIC and AEW acquired for €1.3 bn. The investment volume for the Belgian malls came to €825 mln, reflecting a yield of 4.1%.

Offices
The office sector in Belgium - particularly the assets in the European quarter of Brussels - has traditionally been the motor behind the country's investment market. While a respectable €821 mln has gone into the sector in the first nine months of the year the result accounts for only a 32% share of total spend.

The largest transaction was Finnish pension group Ilmarinen opening up its real estate portfolio to international exposure by acquiring the Covent Garden office tower in Brussels' city centre. Although financial details were not disclosed, the asset is believed to be worth well over €300 mln.

Ilmarinen was following in the footsteps of its Danish peer, ATP, which chose Belgium last year for the first step in its new strategy of taking the direct route when investing internationally rather than going through funds. In May 2015 ATP teamed up with AXA Real Estate to acquire the 151,000 m2 North Galaxy office complex in Brussels from listed property company Cofinimmo.

The value agreed between the parties for the building amounted to €475 mln. ATP Real Estate's share was €428 mln. The investment was the largest single direct real estate investment by ATP Real Estate outside Denmark, and the largest international single real estate investment by any Danish institutional investor.

Market-maker
US-based firms are even more active in Belgium. In the third quarter Apollo Global Management acquired a portfolio of offices in Brussels from CBRE Global Investors for an estimated €145 mln. Interestingly, CBRE GI emerges from the investment data as the leading dealmaker in the Belgian market this year. It was the vendor of the Celsius portfolio to CIC/AEW; the office portfolio to Apollo and Bastion Tower to Schroders.

JLL said that the full-year volume for Belgium could exceed €4 bn due to the amount of international investor interest on the one hand an the number of large retail, office and logistics deals nearing finalisation on the other.